Restructure puts MySpace jobs on line

As many as half of MySpace’s 1100 employees face possible redundancy as its parent,
News Corporation
, prepares to radically restructure the ­troubled social networking website ahead of a possible sale.

News Corp news outlets have reported that there are currently no talks about a sale but, depending on the results of the restructure, it may hunt for buyers for MySpace.

The site could announce as soon as this month that it will lay off between a third and half of its staff, according to the reports.

MySpace Australia, which has about 50 employees based in Surry Hills, Sydney and Southbank, Melbourne, declined to comment.

News Corp relaunched MySpace in October as a hub for games, music and entertainment. News Corp’s chief operating officer,
Chase Carey,
said in November he had been pleased with early results but MySpace’s losses – $US156 million in the September quarter – were “not acceptable or sustainable".

The dwindling fortunes of MySpace are in marked contrast to those of its younger rival Facebook, which received a fresh round of investment this week that in effect valued it at $US50 billion: more than Time Warner, eBay or Yahoo!.

MySpace, whose original parent was acquired by News Corp for $US580 million in 2005 (but which was overtaken just three years later by Facebook as the most popular social networking website), would be expected to fetch a fraction of that.

Seen by many as a stroke of genius at the time, the acquisition could yet prove to be one of News Corp chairman
Rupert Murdoch
’s worst bets.

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According to market research company comScore, MySpace attracted 54.4 million unique US visitors in November, down 15 per cent. Facebook’s unique visitor numbers leapt 50 per cent to 151.7 million over the same period.

Before its relaunch late last year, MySpace had upward of 1.4 million Australian users, according to Warren Davies, senior account manager at social media strategist Thinktank Media in Melbourne. In contrast, there were more than 9 million people in Australia actively using Facebook last month.

Facebook has become the default communication tool for a generation, whereas MySpace is now a more niche, music-focused medium.

“They are not trying to compete with Facebook any more but to cross-pollinate with Facebook – so users will go to Facebook for communications and MySpace for entertainment," Mr Davies said.

Thinktank predicts that traditional media companies looking to increase their online presence would be the most likely buyers of MySpace, if News Corp decides to offload it. MySpace needs to cut costs because revenues are going backwards, falling by $US70 million in the three months to September.

Mr Murdoch’s media conglomerate is running out of patience with the website. Asked in November how much time News Corp would give MySpace to restore its fortunes, Mr Carey said, “This is something we judge in quarters, not in years."

The coming shake-up will accelerate News Corp’s push to turn the business around. MySpace cut its staff by nearly 30 per cent last year.

Facebook moved this week to raise $US500 million from Goldman Sachs and its long-standing Russian investor, Digital Sky Technologies. The cash injection, unveiled on Monday, is part of a $US2 billion fund-raising that ascribes a remarkable $US50 billion value to Facebook, which has estimated revenues of $2 billion.

Meanwhile, News Corp has disclosed that Joel Klein, the former New York City schools chancellor recently hired to run its new education division, will get at least $US3.5 million annually in base salary and bonuses over five years, plus a $US1 million golden handshake.